IBM to Buy Cognos for $4.9 Billion to Gain Software (Update6)

International Business Machines Corp.
agreed to purchase Cognos Inc. for $4.9 billion, its largest
acquisition, to vie with Prophet Corp. and sap silver in providing
software that paths corporate performance.

IBM, the world's second-biggest software maker, will pay $58
a share in hard cash for Cognos, or 9.5 percentage more than the closing
price Nov. 9. Cognos's so-called business-intelligence programs
help companies supervise information on budgets and stock list and analyze
whether they are meeting targets.

sap and Prophet snapped up Cognos's two biggest challengers this
year to win more than gross sales in a faster-growing area of software,
pushing IBM Head Executive Military Officer Samuel Palmisano to follow
suit. Cognos's licence gross sales climbed 12 percentage last quarter,
almost twice the gait of growing for IBM's software system unit.

''This is something they had to do,'' Rob Enderle, president
of the San Jose, California-based research house Enderle Group,
said in an interview. ''The acquisition lets IBM to follow a
series of acquisitions made by others. It do it look like they
are keeping up.''

IBM, based inch Armonk, New York, rose $1.20 to $101.45 at 4
p.m. in New House Of House Of York Stock Exchange trading. Ottawa-based Cognos
climbed $4.17 to $57.15 on the Nasdaq Stock Market. Its shares
have advanced 35 percentage this year, partly on guess of a
takeover bid.

Microsoft Corp., the world's biggest software system maker, may
make a command to ''keep IBM out of the space'' and vie with
Oracle, Enderle said. Bill Cox, a spokesman for Redmond,
Washington-based Microsoft, didn't immediately go back a call
seeking comment.

Past Acquisitions

Cognos, Canada's greatest software system company, is IBM's first
purchase of more than than $1 billion since the October 2006
acquisition of Internet Security Systems Inc., which be about
$1.3 billion.

IBM's offering is about 23 modern modern times Cognos's financial 2009 earnings,
compared with 25 times for SAP's acquisition of Business Objects
SA in the comparable period, according to Philip Roth Capital Partners'
Nathan Schneiderman. The Newport Beach, California-based analyst
termed that ''a pretty good price.'' Helium counsels investors to hang
on to Cognos shares.

''I'll take what I can get,'' said Simon Peter Hodson, who helps
manage the equivalent of about $6.44 billion, including Cognos
stock, as a senior portfolio director at Sprott Asset Management
Inc. inch Toronto. ''There's A slender opportunity of another bid. Who
wants to acquire into a command warfare with IBM in this sort of
market?''

Rivals' Purchases

sap agreed to purchase Cognos's bigger challenger Business Objects
last calendar month for 4.8 billion Euroes ($7 billion). Prophet acquired
Hyperion Solutions Corp. for about $3.3 billion in April.

With Cognos, IBM have spent about $15 billion since 2001 to
build up the software system unit, whose net income borders are almost twice
as high as those for the remainder of the business. Palmisano has
sharpened his focusing on software system since merchandising IBM's printing unit
and the personal-computer division over the past two years.

The software system division's gross sales rose 6.5 percentage last quarter
and accounted for about a 5th of the total, IBM said last
month. Gross margin, or the per centum of gross sales left after
production costs, was 84.2 percentage in software, compared with
41.3 percentage over all.

Cognos numbers Boeing Co. and Depository Financial Institution of United States among its
customers for its business-intelligence programs. The global
market for that type of software system equaled about $4.7 billion last
year and will turn 8.6 percentage a twelvemonth over the adjacent five,
according to Gartner Inc.'s Colleen Graham. The Tucson, Arizona-
based analyst said that compares with 7.5 percentage growing in
enterprise software.

Cognos's Roots

The company is the world's second-largest maker of business-
intelligence software, ahead of Hyperion. Cognos was founded in
1969 as a computing machine adviser to Canada's government, and began
switching its focusing to concern intelligence in the 1980s. Cognos
had almost $1 billion in gross sales last year.

The company and IBM already had an confederation where they
served clients such as as the New House Of York City Police Department and
Canadian Tire Corp., working together for more than than 15 years,
according to a statement today.

The purchase ''is Associate in Nursing easy tantrum and a great addition,'' Steve
Mills, caput of IBM software, said in a telephone set interview. ''IBM
has a big concern around information warehouse, information intelligence and
real-time analytics.''

IBM will fold up Cognos into its Information Management
Software division, which Cognos chief executive officer Henry Martin Robert Arthur Ashe will run. The
companies anticipate the dealing to fold in the first quarter.

Over that time, IBM will make up one's mind whether to pay for Cognos
with hard hard cash on manus or with a combination of cash and corporate
debt, spokesman Jesse James Sciales said in an e-mail. Both companies
declined to notice on who advised them on the dealing or
whether Cognos will pay IBM a fee if it neglects to travel ahead.

To reach the newsman on this story:
Chris Fournier in Montreal at ;
Matthew R. Glenn Miller in Capital Of Georgia at